The primary cause of concern is Moody's belief the U.S. government is now more likely to turn its back on banks that are failing, a response 180-degrees removed from the rescue efforts of the 2008 and 2009 financial crisis, the Times said.

The two-grade knockdown would not have as severe an impact on the banks as it might have had during the financial crisis as consumer confidence and stock prices have both risen since then, the Times said.

JPMorgan Chase and Goldman Sachs would also fare better than Morgan Stanley, because a two-grade rating drop would put Morgan Stanley's rating very close to junk status.

The Dodd-Frank financial overhaul bill of 2010 was designed to protect consumers from bank abuses and taxpayers from bank failures, spelling out a method of winding down a bank if it began to fail to prevent another wave of expensive bank bailouts.

But that could leave bank creditors high and dry.

"The conviction on this subject is clear, even growing. This could lead to a one- or two-notch downgrade for some of these firms," said David Fanger, a bank analyst at Moody's.

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